Saga plugs £31m pensions gap

SAGA Group, the company that famously unlocks the spending power of the 'grey pound', has revealed an embarrassing £31m deficit in the pension fund it runs for its own 'oldies'.

But the specialist in holidays, financial advice and services for the over-fifties, has decided to bail out the final-salary pension scheme by increasing its contributions to the fund.

In contrast to many companies that have closed such schemes when faced with a large shortfall, Saga is stepping up payments from 12% to 15% of the yearly salary bill.

Figures filed at Companies House show the private company is in robust shape to make good the pensions shortfall.

In the year ending 31 January, Saga made a pre-tax profit of £54.9m on a turnover slightly down at £341m. A powerful performance in the company's financial services business helped boost group profits by £15.86m, according to Peter Bettley, director of corporate communications.

A more comprehensive analysis of the company's financial performance was impossible last week because the directors were taking life at a suitably measured pace and had decided to take half-term week off.

And Bettley, who was holding the fort, admitted he had not seen the figures. 'I am afraid you have an advantage over me,' he said.

Despite Saga's relaxed corporate style, the group has successfully exploited its database of 6.5m customers.

Bettley said: 'There are 19 million people over the age of 50 and they own 80% of the UK's wealth. They are growing in number and they have huge spending power.'

Saga has also spearheaded a radical change of image for the over-fifties. Helping this process is Saga magazine, which in the past two years has featured on its cover a semi-naked Helen Mirren, Rolling Stone Mick Jagger and, more recently, Tony Blair, who turned 50 in May.

The group has also bought radio stations in London and the Midlands, which have reported growing audiences enjoying music from Bing to Sting.